Insurer Must Pay Woman Struck By Falling Tree at Golf Court, Illinois Court Finds Coverage Under Ambiguous CGL Policy.

An Illinois appellate court has ruled that Indiana Insurance Co. must pay a portion of a $4.5 million verdict won by a woman who was struck by a falling tree at a golf course pursuant to a $1 million commercial general liability policy issued to Royce Realty & Management Inc. 

Royce was the property manager at Lakemoor Golf Club, where the accident occurred. Lakemoor Golf Club’s insurer has already contributed $3.5 million toward the verdict. The appeals court found that coverage was not barred by an endorsement limiting CGL coverage to claims arising out of the ownership, maintenance or use of Royce Realty’s offices, or out of operations that were necessary or incidental to those premises.

Royce Realty had overseen property management operations at the golf course from its own office, which was insured by the CGL policy.  Indiana Insurance argued that the endorsement transformed the CGL policy into an insurance policy that covered only risks occurring at Royce Realty’s office.  But the Illinois appeals court read the endorsement to cover accidents arising from Royce Realty’s use of the insured office to conduct property management, even if the accident occurs outside of the insured premises.

“We find that the meaning of the endorsement ambiguous, in that it limits coverage to losses arising out of Royce Realty’s ‘use of the premises’ and arising out of ‘operations incidental to those premises’ without defining those terms, and reasonable people could differ over the meaning of the terms,” the appellate court held.

“We must be guided not by what the insurer intended but by what a reasonable person in the shoes of the insured would understand the policy to mean,” its ruling said. “We do not believe that a reasonable person, having intended to protect against risks associated with his business operations and having bought a policy labeled as a CGL policy that purported to insure such risks, would read the endorsement as nullifying most of that coverage.”

To read the court’s full opinion, click here.

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